Former PSs and GS form microfinance business
Four former principal secretaries—Thato Mahasoa, Limakatso Chisepo, Maphutheho Ranohe and Nonkuloleko Zaly—have teamed up with ex-Government Secretary Moahloli Mphaka to form a microfinance business.
Launched on Friday in Maseru, Letlotlo Credit Finance Ltd is targeting “the unbanked masses” with the ultimate goal of transforming into a “development bank”.
Letlotlo offers short and long-term loans and charges 36 percent interest as opposed to 30 percent by most of its competitors catering for the same public without access to conventional banking services.
Mr Mahasoa is a former Defence and National Security principal secretary (PS), while Ms Chisepo, Ms Ranohe and Ms Zaly were with the ministries of Social Development, Mining, and Communications, respectively. They all left their respective jobs last year.
Mr Mohasoa told the Sunday Express that the initiative was born out of the need to develop the country’s economy and create jobs and not to prey on desperate Basotho.
“The five of us are seasoned professionals with expertise in various fields. It would be a shame if we were to queue for jobs when we have the capacity to contribute to job-creation in our country and economic growth,” he said.
“Letlotlo Credit Finance Ltd is registered as a public company, and licensed to operate in line with the Financial Institutions (Credit Only and Deposit Taking Micro-Finance Institutions) Regulations 2014 under the aegis of the Central Bank of Lesotho. It is also a member of the Lesotho Micro-Finance Association.”
The company, he added, is expected to grow and establish branches throughout the country and begin to sell shares to the public within five years with the aim to later grow into a development bank.
“It is increasingly difficult for ordinary people and small business to access services at regular banks. This means it is very difficult to start small businesses because there is nowhere one can easily access money for such enterprises,” Mr Mohasoa said.
“We are hopeful that we will acquire a license from the Central Bank of Lesotho to become a deposit-taking institution to allow our clients to invest with us.”
Short-term loans, he added, would be payable within six months and are ideal for those who want to pay school fees, take care of low-value tenders and other personal needs.
“Long-term loans will be given to individuals who want to set-up companies or expand their businesses,” Mr Mohasoa said.
“We know the problem of unemployment is big in this country and this is one of the issues we are hoping to address through this business and change the lives of our people.”
Asked how the partners raised capital to start the business, Mr Mphaka said they contributed from their personal savings.
Mr Mphaka also defended the 36 percent interest they are charging on the loans when other such businesses and ‘stokvels’ charge less and dismissed suggestions that they had become loan sharks who were taking advantage of hard-up masses.
“We assess whether he or she can afford the interest. It depends on how much net income the client earns.
“This is not a normal money lending business and neither are we loan sharks as you are calling it. We don’t only lend money but also allow our clients to invest their finances with us and earn interest,” Mr Mphaka said.
Former Trade and Industry minister S’khulumi Ntsoaole told the Sunday Express at the launch that he was convinced the company would not be a “fly by night” initiative.
“Letlotlo partners are professionals and I would like to believe they have done their research about sustainable business models,” he said.